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“International companies that have had a presence in Luxembourg for many years are increasing their activities here to create fully operational
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fifth of transactions were accounted for by professional services firms. EU institutions were responsible for a quarter of transactions in 2015, and so far this year local public administration have contributed about one sixth of the total. The continued success of Luxembourg’s investment fund industry has had an impact, and so too has the desire of multinational firms to beef up their operations in the Grand Duchy. “International companies that have had a presence in Luxembourg for many years are increasing their activities here to create fully operational business units,” explained Romain Muller, managing director of JLL Luxembourg. All departments and senior employees are being moved to Luxembourg, and professional services firms are growing to serve this activity. Mr Muller estimates that 20-25% of recent commercial real estate transaction growth is directly linked to this trend which has been gathering pace in recent years. MAJOR TRANSACTIONS Major transactions in 2016 have been BGL BNP Paribas’ 28,300m2 on the Kirchberg, the European Commission’s 15,000m2 offices also on the Kirchberg, and consultant BDO’s 10,600m2 in the Cloche d’Or. Other sizeable moves include DekaBank’s 8,900m2 by the airport, the bank Société Générale taking 5,608m2 in the CBD, and five other 4,000m2 + projects for four financial sector players and one for use by the e-commerce
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business units.” Romain Muller Managing director of JLL Luxembourg
industry. At least another major transaction (by the broadcaster RTL) is expected in Q4. Seven large property deals of more than 10,000 square metres were made in 2015, and the JLL report pointed out that this was the highest number for five years. The European Commission took two large properties in the Cloche d’Or, law firm Arendt & Medernach moved into their new Kirchberg offices, the EU’s European Investment Bank expanded into two buildings on the Kirchberg, the financial regulator, the CSSF, relocated to the CBD, and consultants EY inaugurated their landmark Kirchberg office. In 2014 there had been three such major deals: KPMG (Kirchberg), BCEE (station) and PwC (Cloche d’Or). The large Ban de Gasperich project in the Cloche d’Or is providing the growing room the capital needs. “This will be a mixed-use zone with homes, offices and retail,” Mr Muller pointed out. A major shopping centre is under construction, and this will feature 120 units: about twice the number as in the existing Kirchberg Auchan centre. Around 1,000 apartments are planned, with a quarter of that
number currently under construction, with most presold. A new French language school is also being built. There will also be offices of course, with the 35,000-square-metre HQ of the consultant Deloitte also being built. “This building is a similar size to that the firm has in Brussels for a market five times the size,” noted Mr Muller, giving a further indication of the market’s dynamism. THE OUTLOOK On current trends JLL believes availability rates will remain broadly at the current level in Luxembourg. The shortage of first grade buildings of more than 2,500 square metres in central districts will ease, with second-hand space being vacated and more speculative completions coming on stream. Brexit remains an unknown, with Mr Muller indicating that he has received “five or six” inquiries from UK firms considering their options. A move might be viable for smaller operations, but if there were to be a large-scale move, places such as Frankfurt, Amsterdam or Paris have greater availability of good quality properties at a decent price.
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